Digitization In Retrospect: A General View Of The Effects Of Digital Globalization In The Business Ecosystem

Less than a tenth of a second.

That’s how fast someone can access information over the Internet – be it an obscure idea or a ubiquitous piece of knowledge. Communication that usually takes days, weeks, months, or even years, is now seemingly instantaneous. And this interconnection offers a vast array of opportunities for the ready and perceptive.

The means of doing business remained relatively undisturbed for the past hundreds of years. International trade is characterized by an elaborate chain of business activity among countries. The ones that supply the raw materials, the states that manufacture and process these materials, and the consumer nations, are all part of an intricate web of trade that tethers the world economy altogether. However, this system mostly serves fortunate countries that lie along known trade routes as they reaped the most benefits that the global industry has to offer. These countries that need access to goods and services but are unfortunately situated in the far-flung corners of the world must rely on the service of middlemen, which is costly and unsustainable. It cannot be emphasized enough, however, that some nations do not profit from this arrangement. Unfortunately, a trade environment with this kind of relationship between suppliers, middlemen, and end users is considered normal and acceptable. Still, for these countries to transcend being mostly on the receiving end, they must diversify their sources of revenue and participate more in the global economy by balancing their imports and exports.

With the introduction of disruptive technologies such as the Internet to global trade, a host of opportunities opened up for import-reliant countries. What used to be a Global North-dominated international commerce is now gradually becoming a haven of trade for nascent economies in the Global South. Trading among countries in the Global South is deemed the fastest growing type of cross-border commercial transaction, accounting for more than half of the trade flows in the entire world. This became possible with the amalgamation of the Internet with international trade and the migration of vital business operations to digital. It cannot be further emphasized that despite the Internet being intended primarily as a communication medium, its introduction tremendously transformed the way we do business, creating a new stream in the global flow – data flow, which, as recorded in 2014, accounts for an estimated 3% share of the world gross domestic product (GDP) equivalent to approximately US$2.3 trillion. When compared with traditional contributors to GDP, data flow has a larger share of GDP than migration or foreign direct investment. Such disruption prompted various businesses all over the world to adapt by incorporating the Internet in their respective business models thus heralding the digital age of business.

However, does this change only impact the surface level of the countries’ economies, or does it permeate to the micro level businesses? To answer such a question, one must inspect how micro, small, and medium enterprises (MSMEs) and the startup sector appear to be forces to be reckoned with in the business ecosystem, despite lacking the logistics that a typical multinational company possesses.


To bridge the gap in their ability to do business as compared to transnational corporations, MSMEs and startups employ digital platforms to their advantage. Electronic commerce (e-commerce) companies, which offer these platforms as their flagship service, have simplified the established, and elaborate process. Digital platforms, thus forever transformed the way of doing business while reducing the cost of international transactions and interactions that take up a huge fraction in a company’s expenses. From the point of view of local startups and MSMEs, the huge cost deters them from expanding their operations internationally. For them, these platforms have, therefore, eradicated a primary obstacle to reaching new markets.

It is projected that 900 million people have international connections on social media. The startup sector and the MSMEs exploited this by constantly expanding their networks to either market goods and services, learn innovative business ideas, outsource manpower, or even hire talents that are rare or usually unavailable within their localities. With the emergence of e-commerce companies, it is now possible to connect customers and suppliers alike internationally without incurring a heavy cost. Simply put, data flow is a powerful, yet lightweight thread that binds the supply chains of the majority of contemporary industries today. With a huge base of prospective clients and a potent means to reach them, even the smallest of enterprises can now be considered a robust global business. Thus, with their newfound capability to penetrate new markets, it would be apt to describe MSMEs and startups as “micro multinationals”. Consequently, economic growth is fostered wherever these seemingly small ventures operate.

In comparison, many companies tend to have complicated operations and bureaucratic inefficiencies when attempting to expand internationally. The pinnacle of impact of digitization in global trade becomes evident in the transformation of business models which enable better cross-border activities. Thus, these complexities and inefficiencies can thereby be curbed as digital technology allows for remote monitoring and supervision, better supply chain management, wider and easier access to global markets, and improved business operations and strategy. In contrast, an organization which isolates itself from the data flow misses the real value of digitization – the heavy exchange of ideas and talents, which stimulate modernization and efficiency.

Digital globalization is responsible for the shift in business activities, the emergence of new markets, and the genesis of novel economic activities. Process, business model, domain, and cultural or organizational transformations are just some of the sweeping reforms that are the by-products of digitization. Moreover, these extensive changes are clear examples of how innovation reimagines goods and services, blurring industry boundaries, and creating new unconventional entrants to markets. These transitions allow the rest of the world to catch up with the industry leaders and establish their own participative and profitable niches in the global economy.